“A New “General Theory”? A review of “Capitalism” by Anwar Shaikh”: Bernard Guerrien

“The goal of this book is to develop a theoretical structure that is appropriate from the very start to the actual operations of existing developed capitalist countries. Its object of investigation is neither the perfect, nor the imperfect, but rather the real. For this reason, the theoretical arguments developed here, along with their main alternatives, are constantly confronted with empirical evidence” (p. 4).

The main claim made by the French students in the “Open letter from economics students” in 2001 was that they wanted “to escape from imaginary worlds”. Anwar Shaikh’s new book Capitalism: Competition, Conflicts, Crises meet this expectation. Shaikh takes reality as a starting point and then comes back to it in order to test the theory proposed – far from the imaginary world, not to say delirious world, of the neoclassical theory.

According to James K. Galbraith, “there hasn’t been one like it for 150 years”. Even if the reviews are usually laudatory, it would be hard not to agree with him. Capitalism is an outstanding book as it proposes a general theory – that encompasses both microeconomics and macroeconomics – that is systematically confronted with empirical evidence. Shaikh describes his theoretical framework as “classical” since it is largely inspired by the work of Smith, Ricardo, and above all, Marx. His theory is constantly compared to the other major economic theories –neoclassical, Keynesian and post-Keynesian. The importance given to the confrontation of each assumption with empirical evidence is a major feature of the book.

Moreover, none of the assumptions made are contradictory to common sense – as opposed to neoclassical models. This book could provide the basis for a radical reform of economics teaching –from undergraduate to postgraduate. This reform has been long-awaited by the students that are sick and tired of the current microeconomics and macroeconomics courses –that is, by “stories” (“fables”, “parables”…) embellished with mathematics. This reform is obviously unthinkable for the moment –especially because the ideological stakes are high. But one can always dream…